Lloyds TSB complained that the adverts of Debt Free UK, a company which offer borrowers the chance to clear their secured and unsecured debts, were misleading. The bank argued that it exaggerated the likelihood of a debt being written off and also Debt Free did not make clear that fees applied to Debt Free’s services.
The advert stated: “If your credit card or loan was taken out before April 2007 it could be completely unenforceable and will not need to be repaid. Our solicitors can use Government legislation to arrange for your outstanding balances to be written off and claim compensation for you without affecting your credit rating.”
Debt Free argued that its advert did not exaggerate the likelihood of a debt being written off because it stated that a credit card or loan taken out before April 2007 “could be” unenforceable, not that all would be.
It also said the advert did not state or imply that the service offered by the company was provided free of charge. They said their costs varied depending on the circumstances of the client.
The ASA upheld the complaints of Lloyds TSB. It agreed that the advert was likely to mislead readers as to the likelihood of their debts being written off.
The agency also found that Debt Free could charge two sets of fees: firstly fees to obtain and assess one or more credit agreements and, secondly, fees paid to take matters forward in the event those agreements were considered potentially unenforceable. It says Debt Free did not make this clear either.
When questioned by the ASA, Debt Free said it did not know what percentage of all credit card or loan credit agreements were incorrect. However, it said that, of the credit agreements they had submitted to their solicitors, they believed approximately 76 per cent of the credit card and 85 per cent of the loan agreements had broken the terms of the Consumer Credit Act to a sufficient degree that they were legally unenforceable as defined under it.